Warner Bros isn’t through with cost cutting after slicing about $200 million from its its operating expenses last year. “We think there’s an opportunity to go even further” — particularly in marketing — studio CEO Kevin Tsujihara said today at the Morgan Stanley Technology, Media & Telecom Conference.
“We spend about $2 billion a year on marketing expenses,” he says. “There’s a huge opportunity for more one-to-one marketing” — especially using the digital data the studio collects from Flixster and Rotten Tomatoes, which parent Time Warner bought in 2011. He also hopes to save by outsourcing some functions. “Third-party vendors are something we haven’t seen — we have a material opportunity there.”
The planned savings come as Tsujihara looks forward to significant growth from TV production, home video, and film franchises led by DC Comics, Lego, and stories from J.K. Rowling’s Fantastic Beasts And Where To Find Them.
The studio chief says he doesn’t worry that audiences will tire of superheroes; DC has a diverse collection of characters. “If you look at Gotham and how dark and gritty that show is for Fox vs. The Flash which is very light for a much younger demographic — we have an opportunity to go after pools that are very different….We’re going to be able to use that diversity to launch a multi-year strategy of superhero movies, DC movies.”
Tsujihara also doesn’t expect a decline in TV syndication as online streaming services including Netflix plus cable channels need proven hits. “A lot of the cable networks are finding that they have failed shows, and they have to fill the programming,” he says. “They’re going out and buying movies that they can quickly program.” Overseas streaming services also need programming. “They saw what Netflix did in the United States…International television revenue is growing fastest of all the categories.”
The Warner CEO is upbeat about home video, following years of plummeting DVD sales. With the growing popularity of electronic sell-through — which has far lower production and distribution costs than discs — “to be more profitable, we don’t need [sales] to grow” although “I do think you’ll start seeing growth again.”
But the industry’s UltraViolet digital locker initiative hasn’t lived up to expectations, especially after Disney introduced its own platform: Disney Movies Anywhere. “We have to figure that piece out,” Tsujihara says. “The magic thing about DVD was it was simple, and easy, and it worked everywhere. We have to replicate that.”